All Forum Posts by: Cameron McCown

@Kimberley Keller Consider a single family with more bedrooms than you need on a 5% down Conventional 30-year fixed loan, where you rent out the other rooms. Or you could put 3.5% down on an FHA loan and buy a 2-4 family house and live in one unit. The cash flow from the other units should pay your bills.

Hold 2% for closing costs and escrows, and I recommend having 6 months' payment in reserves. 401k loan can be used for down payment, as can a gift from family. It does not have to come from one source.

Hope this helps.

There's a lot that goes into spreading business returns and much that can be excluded and added back.  Especially if you're owner-occupying it, there's probably a way unless there's a credit issue.  

@Leslie Eason Plan for having the following:

1) Down payment

2) 2% closing costs and escrows

3) 6 months' payments in reserve

4) Repair costs to rent

If you move into a duplex or triplex and renting out the other part(s), down payment will be 3.5% minimum FHA. If single family house where you're renting rooms, consider 5% down Conventional (less cost and mortgage insurance than FHA). If you aren't going to occupy, 20% down is minimum, and better rates come with 25% down+.

Hope this helps.

What type of financing did you use? Commercial? Did you start an LLC? Did you pay cash? If not, how much down? How much do they rent for? Are they vacant?

Give us dets....

So, down payment fora Conventional/FHA/VA/USDA loan can't be from an unsecured loan. I've used down payment coming from the (improbable) cash-out refinance on a car. Certainly a home equity loan or line of credit. But I don't know a bank or broker who will allow down payment from an unsecured source (including credit cards, personal loans).

Hard money and private money may be different.  Does this help?

@Gary Williams, Put the $50,000 down toward a $200,000 property.  You'll cash flow, have great tenants, and it'll appreciate in real dollars more than a low-priced property will.

If you're willing to house hack, this is even more of an appealing option.  Take care.

These are mostly services for people who haven't run into Bigger Pockets.

@Levi Atterberry, the lender from the large bank is wrong.  There's no qualification to have owned before in buying a non-owner occupied investment property.  There is a 20% down payment requirement, which can be cash prohibitive.

My suggestion would be to either buy a single family with 3-4 bedrooms on a Conventional loan, put 5% down, and rent out the rooms to other people as you live there yourself OR buy a multifamily (duplex, triplex) on a 3.5% down FHA loan, live there, and rent out the other units. You can put more than 3.5% down, but if you put 10% down, you might as well go Conventional on that one too.

The difference is you're occupying the house, so the rates are better and down payment is lower. 

Reason?  In a bad economy, people are going to walk away from an investment house long before they walk away from their own house.

Hope this helps.  Take care.

Part of that $17k may be discount points or 1% Origination fee the lender is using to give you that rate.  If you pay money up front, your rate will go down, and the problem is the amount you pay doesn't often make sense, given the marginal payment difference, for a very long time in the future.  So ask your lender about discount points and origination costs.

Another way they might be doing the "no PMI" is there is actually PMI, however the lender is including it up front in lump sum. Lender-paid PMI (or LPMI) is a thing, and PMI doesn't have to paid monthly.

So I would get a Loan Estimate from the lender, ask about points and origination charges, find out of PMI is being paid in lump sum, and that might be the key to why it seems like such a good deal on the surface.

@Syed H., I appreciate what you're saying.  Someone should absolutely have reserves saved up, and there should be caution around the purchase.  Holding just the "whether to pay off/whether not to pay off the credit card" conversation in isolation, I think there's a real argument to be made for not paying it off.  That doesn't mean money shouldn't be saved up on the side, and I don't recommend it, either.